Passive Income
The three main categories of income are:
Passive income is the income earned by a person, from a rented property, partnership firm, or enterprise, without their active involvement. In other words, Passive income is the income that requires minimal effort or labour to earn and maintain.
Active income is earned by working (or actual participation) in a corporation or partnership. Active income includes salary/wages, self-employment income, which the earner receives for working.
Portfolio income is the income accrued from the return on investments, and it is made up of dividends, interest, capital gains, and royalties.
Passive income is termed Progressive passive income when the income-earner has to make minimal effort to grow the income.
People supporting passive income generally tend to favour the concept of "work-from-home" and the professional lifestyle of "be your boss". Passive income has been commonly used in recent times to refer to money that is earned regularly with comparatively little or no effort on the part of the person receiving it.
Types of Passive Income: Passive income includes
rental properties
self-charged interest, and
businesses
in which the person receiving income does not actively or materially participate.
Passive income has several benefits, which include:
provides people with residual income with minimal time and effort.
Helps improve personal finances and gives people the freedom of time.
Without having to spend much time to make money helps reduce stress and anxiety substantially
helps make one feel more confident about the financial future.
Good financial planning for post-employment retirement can also include passive income from property rentals and dividends/returns from stocks.